The Guyana Revenue Authority (GRA) has suddenly decided to impose duties on imports of goods that are inputs into local manufacturing operations.
For example we were informed that containers of textiles destined for Denmore Garment Manufacturing are lying at the wharves because the manufacturer had never been charged the duties now demanded. Consequently Denmore’s calculation of costs and selling prices, which would have been quoted and contracted to its customers (foreign in this instance), will now be thrown out the window.
Denmore has to shutter its operations for two weeks throwing hundreds of workers on the breadlines.
There are several important issues arising from the GRA’s decision, precipitately sprung on the Manufacturing community, without any consultations.
Firstly there is the matter of equity. As illustrated by the Denmore example above, if the new directive was necessary the manufacturers should have been given some time to complete contracts already booked.
Secondly and more germanely, why could the GRA not let sleeping dogs lie? If, as was reported, no duties were charged for decades, why invoke the Revised Treaty of Chaguaramas to impose duties now?
While the treaty does state (Art 82) that member states “shall establish and maintain a common external tariff (CET) in respect of all goods which do not qualify for Community treatment in accordance with plans and schedules set out in relevant determinations of COTED (Council of Trade and Economic Development)”, which country objected to trigger the GRA’s action?
The truth is, none did and the GRA took its precipitate action simply because someone in that organisation decided to counter its falling tax collection through the reactivation of this duty. This action further illustrates the lack of policy coherence in this administration.
As the Opposition Leader pointed out, the GRA’s plummeting collections are directly related to shrinking economic activity and this burden on manufacturers will only exacerbate this process. This is because sales of their manufactured goods will inevitably decrease due the necessary price increases.
If the Administration in general, and the GRA in particular, was concerned about their overall function in a market-driven economy – namely to create a climate to encourage investment and business by providing incentives and removing obstacles, the former should have instituted the mechanism built into the Caricom Treaty to address the issue of a CET.
Under conditions that are spelled out, Article 83 states, “COTED shall continuously review the Common External Tariff; in whole or in part, to assess its impact on production and trade, as well as to secure its uniform implementation throughout the Community, in particular, by reducing the need for discretionary application in the day to day administration of the Tariff.” There are also a host of safeguard mechanisms in Article 84 and St Lucia has recently decided to invoke this clause and Guyana should join the action.
They should request that in those cases where the other territories of Caricom will use items for manufacturing purposes, they also be allowed to waive duties if they so desire.
One of the primary purposes of Caricom was to create “economies of scale” denied them individually, but even together, they still remain small compared to most of the countries they compete against in the manufacturing arena, where those companies receive subsidies of all kinds.
Last week, taking advantage of the 37th Caricom Heads of Government (HoG) meeting in Guyana, Chairman of the Private Sector Commission (PSC) Eddie Boyer and President of the Caribbean Association of Industry and Commerce (CAIC) Eon Caesar, lobbied various Caricom Heads of State on the matter of the need for a more enlightened policy on duties on manufacturing inputs and received a favourable response.
But the question remains why the Minister of Foreign Affairs and the Minister of Finance (who issues the waivers) did not take independent action before the GRA was seized with its sudden burst of concern for the sanctity of the Treaty of Chaguaramas?
